Professional services firms are implementing automation, mobility and document management systems to expand market share and become more profitable.

By Tony Kontzer

It's been
eight years since Collaborative Consulting turned to the category of software
known as professional services automation, and the move appears to be paying
off. The Burlington, Mass-based consultancy first used OpenAir's suite of
professional services automation (PSA) to automate its processing of time
sheets and expense reports, and feed that data into the invoicing module.

But as the
company has expanded its use of OpenAir (since acquired by NetSuite)—most
recently by using the software's resource management capabilities—the portion
of its consultants’ total hours that are billable (its utilization rate) has
grown from a percentage in the high 70s in 2009 to about 84 percent today, according
to Richard Curzi, vice president of operations. That represents a huge
improvement for a company that's embarked on a five-year plan with a goal of
doubling the size of the company, while adding as few employees as possible and
keeping administrative costs at a minimum.

"To the
degree that we can eke out an additional amount of utilization from the
existing staff, that revenue comes at no cost and goes straight to the bottom
line," says Curzi.

PSA
applications represent one of the most critical IT tools that professional
services firms rely on to thrive in an increasingly competitive market.
According to Jeanne Urich, managing director of consultancy SPI Research, which
generates an annual benchmark report that professional services firms use to
compare themselves with their peers, the number of professional services firms
has been growing steadily over the past several years.

Urich says
they now number 1.5 million in the United States alone, most employing fewer
than 100 people. Meanwhile, her analysis of U.S. government statistics pegs the
U.S. professional services market at $1.3 trillion, with the two biggest
sectors, IT consulting and legal services, accounting for more than $500
billion of that.

In other
words, more firms are hustling to claim their piece of an ever-growing pie, and,
in order to do so, they need to be able to grow. The most effective way to
scale a business to accommodate that growth, says Urich, is by investing in PSA
software, and growing numbers of firms have been doing just that, trading in
their previous dependency on spreadsheets in the process.

In the past
five years, according to surveys by SPI, the portion of professional services firms
that use PSA software has grown from less than 40 percent to nearly 70 percent.
This growth has been fueled in part by PSA software becoming so much more
accessible and affordable to firms of all sizes.

"Ten
years ago, the software didn't run in the cloud," says Urich. "If
it's cheap and it's great, why would you create spreadsheets?"

In fact,
Collaborative Consulting's Curzi says that because the company's consultants
are so often scattered all over the five states where it operates, if OpenAir
weren't cloud-based, "it would be a nightmare."

Larry
Quinlan, CIO of global business consultancy Deloitte, says that the New York
City-based company has a years-long history of working with PSA software to
automate everything from staff scheduling and availability to approval
processes. Although Quinlan won't specify which PSA products Deloitte depends
on, other than to say that SAP software is in the mix, he puts the firm's
dependence on PSA bluntly: "I don't even know how we'd run the business
without it."